State secures reversal in Carmel residents’ inverse condemnation action

No settlement agreement was reached between the state of Indiana and two Carmel landowners who brought an inverse condemnation action costing the state more than $200,000, the Court of Appeals of Indiana ruled in a Wednesday reversal.

Brian Koorsen and Kelly Hoffman, residents of a high-end subdivision that has restrictive covenants reserving all lots for residential use, sought just compensation for the taking and additional sums for litigation expenses against the state after it violated the covenants by constructing a retention pond on a separate, state-owned lot. The pond was used to provide drainage for U.S. Highway 31.

Indiana lost the inverse condemnation action, and although its court-ordered appraisal found the landowners’ damages to be zilch, appraisals procured for the landowners reflected combined damages of $125,000.

The parties engaged in back-and-forth settlement negotiations, with Indiana offering to settle the matter for $45,000 and rejecting the landowners’ request to determine interest, costs and an appropriate award. However, the Hamilton Superior Court concluded the landowners had accepted the settlement offer and were entitled to an additional $171,640.56 in litigation expenses.

Indiana appealed, arguing the parties never reached a settlement agreement because expenses were inherently included in the $45,000 settlement sum. The landowners countered that the statutes excluded litigation expenses and, as such, the state’s settlement offer could not have included them.

The COA reversed in the state’s favor in State of Indiana v. Brian Koorsen and Kelly Hoffman, 20A-PL-2306.

In untangling Indiana Code § 8-23-17-27(c), the Relocation Assistance and Real Property Acquisition Act expense statute; I.C. 32-24-1-12, the settlement statute; and I.C. 32-24-1-14, the eminent domain code expense statute, the COA agreed with the landowners that the Indiana General Assembly did not intend for the state’s statutorily required settlement offer to include litigation expenses by default.

“But due to differing intentions as to how Landowners’ litigation expenses would otherwise be handled, we do not agree that the parties struck a proper bargain,” Judge Leanna Weissmann wrote.

As for the state’s contention that because a settlement offer made under the settlement statute is “exclusive of interest and costs” and therefore must be inclusive of litigation expenses, the COA concluded that sentiment is “not only a deductive fallacy; it also ignores the plain language of the Settlement Statute and the EDC’s fee-shifting scheme as a whole.”

“If litigation expenses were inherently included in the settlement offer, that offer could not later be compared to the factfinder’s damage award to determine if a low-ball settlement offer triggered the landowner’s entitlement to litigation expenses under the EDC Expense Statute,” Weissmann wrote. “In other words, the statutory scheme would be unworkable.”

But the COA concluded that the landowners’ response was not an acceptance, pointing to the landowners assertion that “this cause” includes a claim for litigation expenses under the RARPA expense statute.

“Landowners therefore requested that they be awarded litigation expenses in addition to the settlement sum. Because Landowners’ objective intent was not to forego (sic) litigation expenses in the interest of settlement, their Response did not correspond with the State’s Offer in every respect. Accordingly, there was no mutual assent,” the appellate court held.

“As the provisions of the RARPA Expense Statute, Settlement Statute, and EDC Expense Statute are amenable to conflicting interpretations as to when litigation expenses must be offered and awarded, we can only presume the uncertainty seeped into the parties’ negotiations,” the COA concluded. “In the end, the State offered to settle this cause for $45,000. Landowners responded with a counteroffer of $45,000 — plus litigation expenses — which the State promptly rejected.

“The State then renewed its original offer, but Landowners never accepted it. The trial court therefore erred in finding a settlement agreement had been reached.”

The case was remanded for further proceedings.

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